Darling woos China's wealth fund

Alistair Darling will urge Beijing today to make London the overseas hub of its new sovereign wealth fund as he uses a trip to China to ease relations strained over Tibet and the Olympics.

The chancellor will be the first British minister to visit China since the row over whether Gordon Brown would attend the opening ceremony of the Olympics in August and will seek to defuse the tension by improving Britain's financial and economic links with the fast-growing Asian country.

China's export-driven expansion has provided it with a sizeable war chest that it will channel through the newly created Chinese Investment Corporation into investments overseas. China's SWF has been allocated an initial $200bn (£100bn) - of which $70bn will be invested overseas. Darling thinks the size of the fund will grow because China already has foreign exchange reserves worth $1.5tr.

Darling believes the creation of a London office for the CIC would help the City during its current difficulties and also help make the activities of the fund more transparent.

The chancellor said he would be raising the question of Tibet in his meetings with China's vice-premier Wang

Qishan and premier, Wen Jiabao, but said it was "vital that we continue to engage with China at the highest level to strengthen ties and advance British interests".